Former SoftBank COO expresses regret, cites FOMO
As more details emerge regarding the events that led to FTX’s bankruptcy and stunning collapse, the cryptocurrency exchange’s investors are also being scrutinized.
Namely, many persons are asking just how could so many high-profile investment firms pour a collective $2 billion with apparently so little due diligence.
The notorious Japanese investment conglomerate SoftBank, for instance, is just one in every of many such firms that backed FTX after the startup raised a $400 million funding round in January, valuing the corporate at a staggering $32 billion. SoftBank, which invested as a part of its Vision Fund 2, revealed days ago that it sunk just below $100 million into the corporate. That investment is now marked right down to zero with SoftBank saying “it could not face a fabric markdown in the worth of its stake,” in response to MarketWatch.
In fact it’s not the primary time SoftBank has made an, er, error in judgment relating to its investment. It (in)famously poured at the least $18.5 billion into WeWork, which together with its co-founder Adam Neumann, spectacularly fell from grace.
SoftBank also put money in Katerra, a construction tech startup that also burned through greater than $2 billion in funding before shutting down in June 2021. The firm also loaned $100 million to blood testing company Theranos in 2017 through a non-public equity arm. And it also pumped $500 million into digital mortgage lender Higher.com before signing as much as co-lead its never materialized SPAC. That company has been the topic of varied scandals over the past yr and has been struggling within the face of rising mortgage rates of interest, a slowed housing market and volatile CEO.
Notably, former SoftBank COO Marcelo Claure, who stepped down in late January after a reported battle over pay, had this to say in regards to the FTX fiasco:
Image Credits: Twitter
TechCrunch has reached out to SoftBank for comment on its investment in FTX.
On November 12, Nikkei Asia reported that SoftBank Group had “lost all of the cumulative investment gains it had made through its Vision Fund business as global rate rises and a weakening economic outlook hammered the valuations of portfolio firms.”
The publication went on so as to add that the “Vision Funds’ unrealized gains for the reason that start of investment in 2017 fell to negative $1.46 billion within the July-September period, down from positive $8.49 billion three months ago, in response to its quarterly earnings presentation.”
SoftBank’s disclosure regarding its FTX investment got here soon after Sequoia Capital also marked right down to zero the worth of its stake in FTX — “a stake that accounted for a minor percentage of Sequoia’s capital but as of last week likely represented amongst probably the most sizable unrealized gains* within the enterprise firm’s 50-year history,” as reported by TC’s Connie Loizos on November 9.
But Sequoia had egg on its face for greater than just putting capital into FTX. It also very recently (in late September) published on its website what Bloomberg described as a “ long, meandering profile of Sam Bankman-Fried, a.k.a. SBF, the now-disgraced founding father of the bankrupt cryptocurrency exchange FTX.” Sarcastically entitled “Sam Bankman-Fried Has a Savior Complex — And Possibly You Should Too,” the 14,000 (yes, you read that right) piece was apparently “prominently displayed on the Sequoia website, right underneath the dictum, ‘We help the daring construct legendary firms,’ ” as reported by Bloomberg. Unsurprisingly, as more details got here out across the goings-on inside FTX, that piece was taken down. Bankman-Fried stepped down from his role as CEO of FTX on November 10.
The Latest York Times reported earlier today that “Pantera Capital and Galois became the newest hedge funds to announce losses tied to FTX, $130 million and $40 million, respectively.”
Also amongst FTX’s long roster of investors are: NEA, IVP, Iconiq Capital, Third Point Ventures, Tiger Global, Altimeter Capital Management, Lux Capital, Mayfield, Insight Partners, Lightspeed Enterprise Partners, Ribbit Capital, Temasek Holdings, BlackRock and Thoma Bravo.
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